Shop Admin Tips – Protect Yourself from Unfair Refund Claims

If you sell stuff online especially digital product(s) then chances are that at some point down the path you will face some fraudulent customers who will try to rip you off. I sell many products online (some from my Tips and Tricks site and some from my other web sites). I have seen many of these tricks that the fraudulent customers use to take unfair advantage from the seller.

You probably already know that I have a few WordPress Plugins (e.g. Simple WordPress Shopping Cart, WP eStore, Another one in development) that help you sell online from your WordPress blog so a lot of my readers have WordPress powered site and sell products online. Going forward I am going to try to write more posts on various fraudulent tricks that customers tried on me and how I handled it. Hopefully these posts will help improve your online selling experience as a shop admin. In this post I have covered some aspects of the refund trick that many customers use.


The Good Old Refund Trick

I am pretty sure that most of you who are selling online have a system that makes sure the customer only gets the product after they have made a payment and the money is in your account but do you have any guard against fraudulent customers asking for unfair refunds?

There will be times when the refund claim is valid but sometimes it won’t be. You need to be prepared for this kind of events so the customer doesn’t get you by surprise and take advantage of you.

You might think “why would the customer do that?”, well I don’t know why but there are some people who use this technique to get the digital product for free.

Basically, they purchase your product legally so they can download it then they ask for a refund showing one of the following similar causes:

  • Couldn’t Download the Product.
  • No time to setup or explore the product (this is a weird one)
  • The product does not match the description of the product.
  • There was some functionality that the customer was looking for and is not in the product (why didn’t you ask before the purchase?).

Once you receive a refund request with the similar causes explained above look for one of the following types of customer behaviors to identify potential fraudulent customers who are just trying to rip you off:

  • Asks for a refund within a short time of making a purchase (they already had the refund trick planned out)
  • Unwillingness to cooperate with you to address any issue with the product (it’s like… give me my refund I don’t want to hear anything else)
  • Won’t take the download even if you email them later. (they already got the download now they want the money back)
  • Will send you rude emails with complains about the product (trying to make you feel bad)
  • Open a PayPal dispute (if sold through PayPal) to scare you off.

So how do you protect yourself from these types of fraudulent refund activities? Well, I don’t know of any potion that will remedy this for good but I will share what I know and do to protect myself and hopefully it will give you some pointers.

Safe Selling Tips

It will help you protect yourself from fraudsters if you keep the following simple points in mind when selling online:

  • Give detailed description of the product.
  • Provide clear images, preview, live demo if possible.
  • Tell them upfront how they are going to get the product.
  • Let them ask you questions and respond to their inquiries so they can get a clear picture of the product.
  • State your “Refund Policy” (if any) in the “Terms and Conditions”.
  • Make sure the customer has to agree to the “Terms and Conditions” before they can make a purchase.

Refund Trick Case Study

Time for a real life example 🙂 I didn’t mention the name or email address of the person involved but that shouldn’t make any difference.

A few days ago I got a forum post saying there is an issue with the WP Affiliate Platform plugin that he purchased. It turned out that his server was using an old version of PHP so I gave him a fix for it and thought everything was good. Soon after that I received an email from PayPal for a “Dispute” notification on that purchase! The reason used was that the product was “Significantly Not as Described”!

At this point I was a little speechless cause I have live demo and screenshots showing exactly how the affiliate plugin looks like! Also, all the documentation for the product is accessible to everyone which allows the visitors to see exactly how things are done with the product before they make a purchase. So I asked him how the plugin is different than it is described and also pointed out the “Terms & Conditions” that he agreed to when making the purchase. Then I got the following email back from him:

I read the terms and conditions…no where did you state what version of php you were written to go with…that I can find…your documentation is bare at best when it comes to that.. again, I’ve deleted and will not re download…thanks but no thanks. I’ve lost significant income and credibility already…please just refund..we’ll part friends.

Now, I was even more confused… how can you loose significant income and credibility from a system that you haven’t even setup? This guy was starting to sound more like one of those types I stated above so I took it to PayPal and stated my case. PayPal ruled it in favor of me for obvious reasons. I probably wouldn’t have taken it to PayPal and gave him a refund if his reasoning was appropriate. Anyway, that was not the end of it… soon after he found out that PayPal ruled it in favor of me he sent me the following email:

I’m asking you again , nicely please refund my purchase. I have no need for this and have lost hundreds of dollars and significant credibility with a plug in I cannot use…maybe you want a blog post? I don’t know..but I just want my money back and no more discussion.

I started laughing because at this point his intentions were becoming clear to me. Why would you try to bribe with writing a blog post if you are correct on your points?

Anyway, my advice to you is that make sure you have preventative measures in place and be prepared to fight for situations like this. Oh! And don’t forget to subscribe to my blog to receive the latest posts 🙂

Comments (31 responses)

  1. Abel says:

    This very helpful and great info. Thanks a lot!

  2. Very useful information is provided here! Really these online shopping tips are beneficial and helpful though I keep it in my knowledge and discuss about the vital points with my friends. Thanks!

  3. Andy says:

    Thank you for sharing the details about this case. I’m glad that PayPal was on your side!

  4. admin says:
  5. Magenballon says:

    Hey, I’m searching for a new web host. Maybe you can advise a reliable one? I can register with an affiliate link from you. 😀

  6. Cho says:

    It is not just a PayPal issue – the payment processor does not want the costs/issues of charge backs.

  7. Thanks for sharing your experience.!!

  8. Harun says:


  9. John Gamings says:

    This is why I despise using PayPal, because they are so protective of buyers that getting ripped off by unfair refund claims is practically inevitable

  10. Robin says:

    Nice one.
    Helped me a lot.

  11. Allwyn says:

    Very very Useful article and comments.
    Keep posting.

  12. oyun says:

    These are very helpful tips for people new to ecommerce!! Thanks for sharing your experience.

  13. Oyun says:

    good game

  14. oyun says:

    Recentelly Mat Cutts, Google’s webspam chief told about server hack. This is a point that all ecommerce owner have to pay attention. Nice post buddy!!

  15. Sean Morahan says:

    Several friends and I have moved away from clickbank because unjustified refunds were too easy to claim.

    On some products, we also provide some very valuable bonuses after 30 days to reward buyers for not refunding.

  16. Pakcikayo says:

    Dear Admin,
    I agreed with you. Many scammers will simply claim they can’t download our product and request a refund. It happened to me previously. I hope, people who are selling in their own website, be careful. And don’t let them strangle uS!

  17. These are very helpful tips for people new to ecommerce!! Thanks for sharing your experience.

  18. decoupage says:

    Recentelly Mat Cutts, Google’s webspam chief told about server hack. This is a point that all ecommerce owner have to pay attention. Nice post buddy!!

  19. admin says:

    It works to some extent if you are using a membership plugin and the customers need to be a member before they can purchase anything. WP eMember has that ability to block a member.

    The only issue is that people usually open a new account using fake names or use a different computer to make the purchase if they find out that they are being blocked.

    I was hoping PayPal would introduce an option like that (don’t accept payment from a specified user) but they won’t do it because of the reason I just stated above.

  20. GB says:

    How about including a ‘Ban Client’ option in the plugin that tracks the IP or something similar? The idea being that a buyer may catch you once, but not again.

  21. Al McKay says:

    These are very helpful tips for people new to ecommerce!! People often set up small ecommerce stores and start selling without giving much thought to these types of scams. New online shops need to diligent with the security of their web sites and the structure of the selling process within their web site.

  22. Thank you for sharing the details about this case. I’m glad that PayPal was on your side!

    I know an anti-aging doctor who experienced something like this with someone who came in for Botox injections. The woman claimed that the injections didn’t work, but the doctor saw that they had. Because the woman was very difficult to deal with and the doctor had a decent income from other clients, the woman got a refund and then of course the doctor didn’t accept her as a client again. It turned out that this woman had pulled this with several doctors, often getting Botox injections for free (worth at least $500), but now they’re onto her so she can’t get away with it any more.

  23. Spitt says:

    When people purchase a subscription, they will at times for get about them, and then next time they get billed, claim it was unauthorized access to their PayPal account.

    The best thing to do, is show the original subscription number from PayPal, proving that they created the subscription and didn’t dispute that transaction. Now all the sudden they are disputing as unauthorized even though it’s a recurring subscription? PayPal will rule in your favor.

    I also let people know that they must cancel through paypal, and if they come to me first, within 1 day I will refund… but if they wait, and open a dispute, I will dispute it… and win.

    I don’t know why these types of companies wont

  24. On the Paypal note, they won’t protect digital download sellers like us. I offered to show them days of emails from a customer who claimed that CSV 2 POST had been bought under “Fraud” because someone hacked their account. The emails would have shown that this so called fraudster would have had to email from the same email account as in their paypal, for days! Highly unlikley but Paypal don’t care.

    It’s happen 3-4 times in last few months and I’ve found 2 of those people using the plugin. They teach Ethics at University but it does no good. Most of the young developers I know will steal anything because they are not in a position to have it done to themselves yet.

    It did happen 5 years ago also with a £300 iPod when I was selling physical goods and they were just out. Despite item arriving at address in the paypal account, Paypal put my account minus £300 because it was all I had in the account. I would have had to make over £300 before having any cash in the account.

    My tip on this is plan your marketing, budgets and cash flow to include the posibility of any number of payments being taking back from you. I never treat Paypal cash like real money, because its not!

    Good Post

  25. Ivy says:

    Frank, I agree with you. On one of my other sites I have had a similar experience. I had a customer that was emailing me the information I needed to complete her purchase and it was not getting to me due to the size of her photographs. I had no way of knowing this. After a few days I emailed her saying I had received her payment but not the information. She sent me the information again with smaller photos and I completed her purchase. She then opened a paypal dispute and asked for a refund. I kept asking her to end the dispute (through paypal’s dispute chat) since she had received her purchase, but she kept ignoring it. So I escalated the dispute and send paypal all the emails and the final product and they ruled in my favor. One word of advice don’t be afraid to take the dispute to the next level with paypal. As a seller you have a right to protect yourself just as the buyer does.


  26. Frank Thomas says:

    Boy did I hear you. Not only will someone rip you off, but then they will normally share your work on the public file sharing sites and give it too all of their friends!

    Thanks for passing on the fact that you can dispute a dispute with paypal. Good to know.

    I’ve had people watch over 2 hours of instructions that cost them less then $20 and tell me that it was a waste of time, etc. But I have another 100 other customers who tell me that it’s the best videos they’ve watched! LOL!

    Thanks again!


  27. admin says:

    Thanks for sharing your experience Cédric.

  28. Cédric says:

    I hope a lot of people read your post. I started selling E-Books just a month ago and after a week I already had someone just wanting a refund for no good reason. First he told me “I think I downloaded the wrong E-Book” mentioning something which is not included in the E-Book but it isn’t included in the other E-Book either. Contents of both books are clearly stated on the page. Then he told me “The E-Book didn’t solve my problem”. Nobody said it would and again content is clearly stated. After that he said “Content of the E-Book is out of date”. Not true. I then added the following lines to my page:

    What about refunds?
    You will not get your money back for any reason, sorry. The contents discussed in the E-Books are described on the E-Book’s page so you know what you’re buying. Also there’s no way you could buy “the wrong” book since after hitting the check-out button you have to confirm the product you’re buying and that’s where you could correct the “mistake”. By buying an E-Book you agree to this rule.

    in the hope to keep those kind of people away. Since then I (fortunately) didn’t hear any complaint anymore. There’s a lot of work and time in the book and even if all other people say it’s great that one stupid person hurts a bit.



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